Choosing How to Pass on Your Financial Accounts

In today’s world, it is not uncommon for an individual to own a number of different financial accounts – all with varying rules on when a secondary person may be added or how to pass on the funds contained within it after death. Quick access to cash for the numerous expenses associated with death is a valid concern of surviving family members, which requires appropriate estate planning by the primary account holder. Thus, prudent estate planning includes ensuring that a trusted individual will have access to liquid accounts, usually a bank account, to cover costs. However, bank accounts can be particularly complicated to pass to an heir without tripping unintended legal issues that provoke litigation or the transferring of ownership/withdrawal rights to someone other than the desired individual. Adding authorized users to bank accounts is quite easy, and often serves as a convenience to the original owner, especially as concerns related to physical/mental decline come into play. However, if improperly structured, this seemingly simple arrangement can cause protracted litigation between surviving family members over who has rights to the funds in the account. A discussion of how Florida law treats survivorship rights in bank accounts, and the steps a person can take to more directly control how they are distributed after death, will follow below.

Default Survivorship Rights

When it comes to estate planning, an individual who sets up a will or trust understandably assumes that whatever these documents say with regards to bank accounts will control. However, Florida law maintains that if two or more persons are listed on an account, all rights to the funds contained within it automatically passes to the survivor, unless the contract or signature card expressly states otherwise. Consequently, when one account holder dies, the other listed individual would have full rights to withdraw all the money, and other family members would not have much leeway to stop him/her. Importantly, banks are not required to inform the original account holder of this presumption in favor of ownership rights to the other person, and the only grounds to challenge this rule is if the account owner signed the agreement as a result of fraud or undue influence. Proving the existence of either situation is quite difficult, and while the account holder may not have intended to convey full ownership rights, that is not enough to overcome the law as long as the individual voluntarily intended to add another authorized user.

The personal representative can challenge this presumption, but has the burden of proving survivorship was not intended. The representative must show evidence of an unambiguous written or oral statement from the deceased about the ownership of the funds after death, or testimony from the estate planning attorney, bank employee or other individual with special knowledge about the deceased’s estate plan – rarely easy to produce. Further, even statements in a will or estate planning document that indicate an intent other than survivorship is just evidence, and not conclusive on who has rights.

Altering Who Receives the Money

To avoid this entire situation, it is often better to stay away from using a joint bank account for convenience, when the intent is not for that individual to receive the entire account balance upon death. Instead, you can give someone authority over the account, during the lifetime of the owner, by using a durable power of attorney, which is no longer valid upon the death of the account owner. This addresses the issue of convenience during the lifetime of the owner, without establishing any surviving ownership right in account by the individual that was named in the durable power of attorney. The account can then specify all beneficiaries that the owner of the account intends to participate in the funds upon the death of the account owner.

Contact an Estate Planning Attorney

Distributing liquid assets is one of the most important, but often complicated aspects of estate planning. To ensure your desires are properly followed, schedule a consultation with the law firm of William Rambaum, P.A. This firm has decades of experience helping Florida seniors protect their legacy, and is are available to assist you. Contact the Oldsmar office to learn more.